Shriram Capital responds to InGovern report on arm merger
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Shriram Transport Stock News, Analyst Calls And Reviews
Shriram Transport has decided to lift up Rs 2,000 crore via retail issuances of NCDs to back up its lending objective during the existing financial year.
The initial tranche of about Rs 400 crore is expected to hit the market by the coming month.
Besides, the non-banking finance firm, involved in financing truck owners, is expected to diversify its biz by cross selling investment and insurance products to its clients.
Mr. Umesh Revankar, Managing Director, Shriram Transport Finance Company (STFC) said, “We are coming out with the retail issue of NCDs in the second week of July.”
"The core issue size should be in the range of Rs 300-500 crore, though not yet finalized. The option of oversubscription option will be there with similar amount. Bonds' tenures are of 3-5 years. We will take guidance from RBI's July 18 monetary policy to conclude the coupon rate. It should be somewhere between 10-11%," Mr. Revankar said.
The return of the issue would fulfill 15 days credit need.
STFC normally lends Rs 1,500 crore on a monthly basis on an average.
As on March 31, 2012; its AUM remained at Rs 40,200 crore.
Mr. Revankar said that it is expected to go up 12-15% during FY13 with deeper penetration in rustic belt.
Owing to higher borrowing costs, the company is eyeing to branch out its lending resources.
A string of regulatory modifications in NBFC segment has caused higher cost of borrowings for all NBFCs.
In spite of an unaltered demand for loans, STFC's borrowing costs surged 25 bps during last one year on their total loan portfolio.
"We also want to raise more fixed rate borrowings than floating rate resources. As we lend at fixed rates, the same way of borrowing will also be advantageous to us. In India, interest rates have never gone below 10% for retail business," Mr. Revankar added.
The stock looks good for medium or long term investment.
The investors can buy the stock on declines.
Shriram Capital responds to InGovern report on arm merger
